IEA sees supply crunch threat, higher oil price

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LONDON, Nov 7 (Reuters) Consumers face higher oil prices and the risk of a supply crunch as output may fail to match demand, the International Energy Agency said on Wednesday in its annual World Energy Outlook.

The adviser to 26 industrialised countries also lifted an estimate of how much the world needs to invest in oilfields by 2030 to .4 trillion and warned that a shortfall would send prices even higher.

Oil is within sight of 0 a barrel, leaving consumer governments worried about their economies. It could hit a nominal 9 in 2030 under higher than expected demand growth, said IEA Chief Economist Fatih Birol.

''Although new oil-production capacity additions from greenfield projects are expected to increase over the next five years, it is very uncertain whether they will be sufficient,'' the IEA study said.

''A supply-side crunch in the period to 2015, involving an abrupt escalation in oil prices, cannot be ruled out.'' A barrel of crude may cost a nominal a barrel in 2010 or .03 in real terms, up from a respective .79 and .50 expected last year, the IEA said.

The nominal price may hit 7.59 in 2030, up from .30 expected last year.

DEMAND, INVESTMENT The 674-page IEA study urges leaders to enact policies that will leave the world consuming less fuel in 2030 than if demand, led by China and India, were unchecked.

Oil demand will rise by 1.3 percent a year, the same rate as expected in last year's outlook, to reach 116.3 million barrels per day in 2030 in the IEA's business-as-usual case.

If the economies of China and India grow more quickly than expected, demand would be even higher, at 120 million bpd by 2030, sending prices up.

''Higher growth in energy demand, in turn, coupled with supply constraints, drives up international energy prices,'' the IEA said.

The crude price referred to in the IEA study is the average oil import price for the agency's members, which trades at a discount to U.S. crude .

While the IEA believes world oil reserves are enough to meet expected demand in 2030, some leading industry figures are sceptical production can reach that level as fields in some countries reach peak output.

''There is a real problem -- that supply may not be possible to increase beyond a certain level, say around 100 million barrels,'' Libya's National Oil Corporation chairman Shokri Ghanem said on Oct. 31.

To meet the world's thirst for oil, .4 trillion needs to be invested between 2006 and 2030, mostly on oilfield development and to replace ageing facilities, said the IEA.

That is up 26 percent from a figure of .3 trillion for oil industry investment given in last year's Outlook, and the IEA said a shortfall may push prices up.

''Underinvestment in the exporting countries could drive up prices in the longer term,'' it said.

REUTERS BJR DS1635

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